Paid work alone cannot eliminate poverty in Guyana

Jul 09, 2021 Letters

DEAR EDITOR,

Without question, job creation and high employment must remain priority for national development goals. It is wrong to assume, however, that salaries and wages are the ultimate relief for the poor of working age. This fallacy often prompts the snide remark that social protection is merely an excuse for giving free money to lazy people. The fallacy also lurks in the apparent attitude of successive governments here that social protection schemes should be mostly temporary or minor fixes. As a counter, the United Nations Research Institute for Social Development (UNRISD) saw the need to emphasise that while employment is a major channel through which the benefits of faster economic growth can be distributed throughout the population, “it is not enough.” It added, “Complementary social policies are also necessary” (UNRISD, 2010. Combating Poverty and Inequality).
No country has stamped out poverty – let alone provided a high living standard to its masses —through paid work alone. The requisite quantity and range of high-paying jobs are beyond the reach of market economies. Guyana (oil wealth and all) will not buck this trend. Even if it can, it will take too long to get there.
To understand why paid labour alone cannot eliminate poverty, let’s examine employment in the public and private sectors. Public sector employment, based on the examples set by Kuwait and other oil-rich Gulf States, is now a recognised mechanism to provide citizens with a proper living standard. In Kuwait, for example, public servants are over 60 percent of the total labour force and do live comfortably. In Guyana, public employment hovers around 20 percent or just around 51,000 workers (Guyana Labour Force Survey, 2020). To make public service employment a route to decent living would require a significant spike in the minimum wage and other benefits. But high remuneration raises several problems. For one, it forces the private sector to compete for workers by raising its own pay. This drives up its cost of production, leading eventually to retrenchment or business closures. Secondly, the ethnic and urbanised composition of our public service raises issues about who would benefit and who would not. Thirdly, a high minimum wage makes loss making state-owned entities a greater national burden and deters efforts to divert their human resources to better opportunities. Our sugar industry is a case in point. In summary, work in the Guyana public sector will never be Kuwaiti-generous and deliver the working poor from their struggles.
What about the private sector? It employs over 70 percent of our workers. The largest employers by sectors are agriculture, manufacturing, construction, and wholesale and retail trade, transportation and storage, and accommodation and food service. These jobs are mostly low skilled and low-paid. According to the World Bank (using the 2017 GLFS data), a considerable number of persons work in the private sector with only primary education or less. This simpleness of private-sector production in Guyana makes it the unlikely saviour of low-level employees and the self-employed in both formal and informal activities. The World Bank calculated that just under 45 percent of self-employed persons and close to 40 percent of private sector employees are poor (the remainder work in the public sector).
Looking forward, can the private sector boost its complexity and productivity to offer high pay and remain competitive? Can Guyana be an attractive investment destination as a high-wage country? If the answer is yes, let us hear the case. Of course, paid employment cannot eliminate poverty for those who do not work due to particular circumstances, such as the elderly, children, the unskilled, the redundant, and job seekers. Likewise, employment cannot help those who are engaged in unpaid labour, such as informal caregivers and domestics (who speaks for these women?).
Building a poverty-free and contented society would require the provision of decent work opportunities as well as the creation of a comprehensive social protection system. The average working Guyanese must have a good take-home pay, free or cheap social services (inclusive of transportation, nutrition support, and justice), subsidies (for water and electricity), tax breaks, (for mortgage payments, etc.) and transfers (child allowances, etc).

Yours faithfully
Sherwood Lowe

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